CHAPTER 3
Protectors of the Public
In our previous article on chapter two of the book The Creature from Jekyll Island, it focused on the “conspiracy” of Bailouts. Well in chapter 3 of this book it gets into proof of the ” conspiracy ” talked about in chapter 2 of this book. Now that they talked about the rules to this game, they show examples of the game being played. The first example given was Penn Central, followed by Lockheed, New York City, Chrysler, Commonwealth Bank of Detroit, First Pennsylvania Bank, and Continental Illinois.
Penn Central
Penn Central was the largest railroad with about 96,000 employees and a payroll of $20 million a week. And in 1970 it became the biggest bankruptcy. They were in deeply in debt to every bank that was lending to them. That list included Chase Manhattan, Morgan Guaranty, Manufactures Hanover, First National city, Chemical Bank, and Continental Illinois. Officers at the largest of these banks were appointed to Penn Centrals board of directors as a condition for getting funds. Eventually they acquired control of the railroad’s management and held large amounts of stock in their trust departments. This was very convenient for the bankers to be sitting on the board of directors because they had inside information long before the public received it which would affect the price of the stock in which they all held.
So on May 21 when the railroad went under, Penn Central chief financial officer privately informed the representatives of the company that company finance was so weak that would have to postpone an attempt to raise $100 million in operating funds and seek some kind of ” Government loan Guarantee” or it would have to close down. The following day Chase Manhattan’s trust department sold 134,300 shares of its Penn Central holdings. And sold another 128,000 shares before May 28 when the public was informed. Of course the bank chairman, David Rockefeller denied inside trader information. Had the railroad went bankrupt, the bankers were still going to be protected. A win -win once again for the bankers. The banking cartel better known as the Federal reserve was created for this kind of bailout. When the company’s cash crisis came to head on over the weekend, Arthur Burns ” Mr. Burns”, who was the Fed’s chairman at the time got on the phone and called the heads of Federal Reserve Banks around the country. He basically told them to get ready the Fed was going on a printing spree and then was going to loan it out to commercial banks so they can flip it and loan to Penn Central and other corporations, like Chrysler that was in the same situation. Penn Central’s executives, bankers, and union reps came to congress deep to kick them the same BS we have heard over and over again, like how it was in the best interest of the public, the working man, and the economy.
So congress did what they always do, approve loans and pass it on to the taxpayer because they are brought and paid by the corporations. See how this scam works now? See how we keep getting played yet? So, After the Emergency Rail Services Act of 1970 authorizing $125 million in federal funds it was a matter of time before the railroads became nationalized and become a black hole in which tax dollars disappear. This came to pass with the creation of AMTRAK in 1971 and CONRAIL in 1973. AMTRAK took over the passenger services of Penn Central and many other railroads as well. CONRAIL took over the operation of Penn Central’s freight services long with five other Eastern railroads. CONRAIL lasted from 1976-1999 then became CSX Transportation and Norfolk Southern.
Lockheed
In that same year 1970, the Lockheed Corporation was the largest defense contractor and were on the verge of bankruptcy. Bank of America and several other smaller banks had loaned a total of $400 million to them. These banks were not about to lose interest of this big loan, so what do they do? They join forces with Lockheed management, stockholders, and labor unions go to Washington to ask for money. Sympathetic brought and paid for politicians listened to the sob story that if Lockheed was allowed to fail 31,000 jobs would be lost, hundreds of sub contractors would go down, thousands of suppliers would be forced into bankruptcy, and national security would be in jeopardy. A bailout plan was put together by Treasury Secretary John B. Connally that once again made the co-signer was the taxpayer. But what most people over look in this deal is that government now had a motivation to make sure Lockheed got the awarded as many defense contracts as possible and that they were also profitable as possible. Other defense contractors who were more responsible went under but this can’t be proven, this was an indirect way to pay off the banks using tax dollars. In 1977, they paid off the loan using taxpayer’s money.
New York City
Yes, the city of New York was bailed out. Even though its not a corporation, it operates like one in many ways, especially when it comes to debt. In 1975 New York City had reached the end of its credit line and was unable to make payroll. New York had long been known as a welfare state. Success in politics was made with the false promises “LIES” of subsidies and benefits for the poor. But we known when they got into office those promises went unrealized. New York was also known for political corruption and bureaucratic fraud, which means most of the money that was loaned to the city padded the politicians pockets. By 1975 New York had borrowed up to 2 billion dollars and could not find more lenders. They had three options, increase city taxes, reduce expenses, or go into debt. The debt was held by a few banks dominated by Chase Manhattan and Citicorp. When New York stopped paying on their debt, the bankers and city leaders traveled to Washington to ask for a bailout. They said the largest city in the world could not be allowed to go bankrupt. They said essential services would be halted and millions of people would be without garbage removal, without transportation, and even go without police protection. Starvation, disease and anarchy would run rampant throughout the city, and they would be a disgrace to America. David Rockefeller got his friend Helmut Schmidt a Chancellor of West Germany to make a statement about how the New York situation could trigger an international financial crisis. So after scaring and paying off some members of Congress in December 1975 passed a bill authorizing the Treasury to make direct loans to the city up to 2.3 billion dollars. All of this money had to be borrowed of course by Congress that’s already in debt to the Federal Reserve which created directly or indirectly all this imaginary debt in the first place. But hey, at least the banks got paid and once again the bill went to the gullible tax payers of America.
Chrysler
Now we have Chrysler, by 1978 they were on the verge of bankruptcy. All because they were stupid with their funding and kept making gas tank size cars during the OPEC oil embargo which drove up the gas prices and also the rise and popularity of smaller import cars made this decision very foolish. They had a bunch of cars they couldn’t sell and money they had to pay back. So once again a team was formed and they went to Congress with the story that the public would suffer greatly if they limited to two American made cars instead of three, what a joke. So what happened? Congress guaranteed up to $1.5 billion in new loans. And passed the bill on to the tax paying public once again.
Commonwealth Bank of Detroit
Another example of too big to fail bank with 1.5 billion in assets was failing. They needed a bailout because they were borrowing from another big bank Chase Manhatten Bank of New York to invest in high risk, high rewards that failed. So once again the same crap happens, they go to their little puppets and they them how bad this would be for the economy so we need a bailout speech. So, FDIC pumped $60 million loan and federal guarantees of repayment. Commonwealth was sold to Arab consortium and Chase took a minor lost but converted most of their government taxpayers money into government backed assets…….good for them! Once again the blind hardworking taxpayer paid for it all.
First Pennsylvania Bank and Continental Illinois
In 1980 First Penn was the 23rd largest bank in the nation with 9 billion in assets. They were falling went to Washington with the same story. So the FDIC gave them a $325 million loan interest free for the first year. The Federal Reserve Cartel offered money to other banks for the purpose to loan to Fisrt Penn, that advance was $175 million in immediate loans and a $1 billion dollar line of credit.
In 1982 Continental Illinois was the seventh largest bank in the nation with $42 billion in assets. They began to crash with the worlds first electric bank run. They cash flow became negative when overseas bank began to withdraw deposits. Th Federal Reserve Chairman at the time Volcker told the FDIC it would be unthinkable to allow the world economy to be ruined by a bank failure this big. So once again the FDIC assumed $4.5 billion in bad loans and return took � percent in the form of stock. The bank was nationalized and the United States government is now in the banking business.
Federal Deposit Insurance Corporation ( FDIC)
The FDIC is not what it appears to be. It is not the insurance program we have been led to believe, if anything it increases the probability that bank failures will occur. The FDIC has three options when bailing out an insolvent bank. Option one is the payoff. This rule is for the little bank that don’t have enough funds to pay politicians. The second option is the sell off. This where the saying ” big bank takes little bank” comes in. That’s what literally what is happening. The third is option their favorite, its called bailouts! But these bailouts are for select few. That’s right, big banks are owned and operated by this banking cartel family. They put everything in our faces if only we pay attention. This was the part of the plan all along on Jekyll Island, to give a competitive edge to the banks owned by the cartel. All of these were examples of why the Federal Reserve Cartel was created and why they need to be abolished. Federal Reserve acting like the lender of last resort creating money out of thin air resulting in the stealing of the nation’s wealth through the hidden tax called inflation. But are these bankers protector of the public or enemies of the people. I say they are the enemy of the people but the people don’t even know it.
Chapter 2 The Name of the Game is Bank Bailouts
Chapter 4 Home, Sweet Loan